Our Perspective
Our relationship to the markets extends beyond transactions
Our Perspective
Our relationship to the markets extends beyond transactions
DC Energy is committed to the development of efficient and reliable energy markets – for the exchange of both real energy products and their corresponding financial energy contracts. To deliver the core benefits of reasonable costs and reliability, efficient and robust energy markets are a necessity. Well-functioning markets share three key characteristics:
Open access: Competition and new entrants create entrepreneurial activity, the source of innovation. With the twin challenges of rising fuel scarcity and environmental constraints, fresh thinking and competition are critical to providing reliable solutions to end-users. Open access should allow participants to buy and sell at all the geographic points in the network - what is referred to as locational marginal pricing (LMP). Today over 60% of the US has adopted this fundamental competitive structure, with the remaining markets served by local monopolies.
Transparent pricing: Only when pricing reflects true underlying economics can the proper incentives exist for efficiently operating existing plants, rationally building new infrastructure and empowering the end-user to adjust their consumption. LMP serves to encourage competition and innovation and avoids the broad socialization and obfuscation of costs.
Safe and dependable credit policy: Though individual participants may fail or flourish, the market as a whole must be assured of the integrity of all transactions. Policies must be in place to ensure that contractual commitments are honored so that the entire industry can continue to function, regardless of the fortunes of individual firms.
Benefits to End Users
Benefits to End Users
An open and robust financial market creates benefits for end-users by bringing more competitive pricing. DC Energy is a strong advocate of market policy that promotes competition and efficiency.
DC Energy's trading activities improve the efficiency of the physical market which can then deliver lower-cost energy to end users. Location-specific nodal contracts are required to accurately represent physical flows and their financial outcomes. Far from blind speculation, our trades are anchored in fundamental analysis of the economic realities of the underlying infrastructure, thus contributing to a market which has fair valuations for all participants. In the volatile and developing energy world, efficient financial markets help shield participants from uncertainty so they can focus on the operations of physical production and delivery.
DC Energy is also heavily involved in promoting economically sound and effective policies and structure in the energy markets. We are committed to helping shape rational policy that ensures competitive energy markets realize their potential to promote innovation and efficient capital allocation.
Policy Focus Areas
Policy Focus Areas
DC Energy advocates for policies common to well-functioning markets. When structured appropriately, markets are a powerful force for delivering a host of consumer benefits, including appropriate pricing and optimal infrastructure investments. Across all of our efforts, DC Energy’s policy focus falls primarily on three key aspects of market policy:
Competition: Competition is critical to any market. DC Energy promotes policies intended to increase competition by leveling the playing field across all participants so that innovation and superior capabilities can prevail over status quo and legacy.
Demand Response: A market works best when all of the customers, as well as all of the suppliers, can freely buy and sell. End-use and wholesale customers should have the liberty to buy and consume power at the price and time they find attractive. Without end-use customers responding to real-time market prices demand is distorted and innovation stifled. Among all the environmentally-responsible options available, demand response should have the highest priority.
Transparent and Open Markets: Open and transparent markets are critical in fostering the robust financial participation that supports appropriate pricing and ultimately drives efficient capital allocation into infrastructure investments. DC Energy promotes policies that increase market transparency and engender confidence among participants.
In our view, the Independent System Operators and FERC have established an exemplary competitive wholesale market structure that is beneficial to the consumer and end-users. This market structure creates locational marginal prices (LMP) across geographic nodes in the grid and encourages competition at each of these locations. Across these markets over 1,000 suppliers compete to serve the customer. Customers in over 60% of the US benefit from these competitively-driven markets. Through our involvement with regulators, we have helped to further enhance competition and transparency in these markets by refining credit policies, expanding geographic coverage for well-converged markets, and developing long-term and more granular market products.
References.
In 2020, PJM, the largest Regional Transmission Operator (RTO) in the United States, commissioned London Economics International, a consulting firm, to conduct an independent assessment of the Financial Transmission Rights (FTR) market in PJM (see links below). Their report highlights the overwhelming benefits of markets and the importance of financial participants like DC Energy.
The New York Independent System Operator (NYISO), commissioned William Hogan and Scott Harvey, two longstanding leading thinkers in electricity market design, to provide an assessment, a historical perspective and a future outlook of Locational Marginal Pricing (LMP) market design relative to other market constructs (see link below). Their 2022 report highlights how the LMP markets provide the most efficient price signals to incentivize optimal use and development of the bulk electric system as it relates to generation, transmission, demand response and storage.
The Midcontinent Independent System Operator (MISO) commissioned London Economics International to conduct an independent assessment of the Financial Transmission Rights (FTR) market in MISO (see link below). Their 2023 report highlights the benefits of FTR markets and the importance of financial participants.
Licensing & Authorities
Licensing & Authorities
DC Energy, or its affiliates, are authorized to transact across a number of market platforms.
We participate in a number of regulated competitive energy markets including:
Additionally, we transact in CFTC regulated exchange markets including:
Memberships & Affiliations
Memberships & Affiliations
In addition to pursuing policy goals on our own and through the market-oriented forum provided by FERC, as well as the RTOs in the electricity markets, DC Energy maintains active participation in a number of organizations concerned with policy development. Across the community of participants in the energy markets, DC Energy seeks out institutions, coalitions and advocacy groups committed to refining the markets and developing policy that promotes market efficiency. Our affiliations include links to:
North American Energy Markets Association